The gloves are off and we’re into the main fight. First round has definitely gone to the upstart start-up, Airbnb. Airbnb, just in case you’ve been living on another planet for the past five years, is an internet-based short-term accommodation portal… a person-to-person accommodation service which is challenging the hotel industry and the traditional travel booking hierarchy. It’s a website, it’s an App, it’s changing the way you book a room.
Want to book two nights in Pattaya? In the past you called your travel agent, they recommend options and you booked the room. The agent took their commission and all was wonderful in the world. But with Airbnb YOU jump online (or on your smartphone), scroll through the Airbnb offerings and make your booking directly with the owner of the Bed ‘n Breakfast/spare room/converted attic.
What the internet has done to traditional newspaper classifieds and booking a flight, Airbnb is now doing to the Hotel industry. And they’re not happy. (Mock surprise).
In Thailand the Thai Hotels Association (THA) has lobbied hard for the Government to hit back at the rise of the privatised hotel rooms. Around Thailand (and the rest of the world) hotels are now in a battle with condos and private spare rooms being rented out as an alternative to the hotels. Let’s face it, hotels have had a good run for a long time and are ready for a shake up. People are voting with their online power and booking for an alternative accommodation experience. Founded in 2008 Airbnb now has over 1,500,000 listings in 34,000 cities and 191 countries. That’s a serious competitor. The THA has convinced the Thai Government to crack down on the private rooms with three blunt tools. 1) Private rooms accommodating foreigners must register their guests with Thai Immigration 2) Private rooms and condos must be registered as a ‘hotel’ and 3) the owner of the condo/room must have a Work Permit allowing them to conduct an accommodation business in the Land of Smiles. All this wreaks of more red tape and money into the coffers of the Thai Government and a protectionist policy to pacify the THA.
All this will need to be policed if it is to have any effect on the burgeoning private room sector. The genie is well and truly out of the bottle and the Thai Government may find it easier to work with Airbnb and the new competitor to the THA rather than trying to whack them over the head. Just like car-pooling and ride-sharing start-ups like Uber taking on the taxi industry, you can’t just ignore the new wave of convenience sweeping our lives. Better the Thai Government work with the Airbnb’s of this brave new world and allow a better experience and alternatives for its ever-growing tourist industry. It’s clear that the tourists are seeking newer, better experiences than just staying in a standard 30 square metre room (usually called ‘superior’ or ‘deluxe’ but are neither superior or deluxe).
For Thailand’s property and real estate sector the new guidelines will need to filter down the system to get a better picture of how it will affect the sales of condos, if at all. In the meantime occupancy rates in Thailand’s hotels remain stable so it seems there’s room for both.
Round Two starts now.
Sources: CBRE report, Bangkok Post, Airbnb.